VA Health Care:

Actions Needed to Improve Administration of the Provider Performance Pay and Award Systems

GAO-13-536: Published: Jul 24, 2013. Publicly Released: Aug 23, 2013.

Additional Materials:

Contact:

Debra A. Draper
(202) 512-7114
draperd@gao.gov

 

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What GAO Found

The Department of Veterans Affairs' (VA) performance pay policy has gaps in information needed to appropriately administer this type of pay. The performance pay policy gives VA's 152 medical centers and 21 networks discretion in setting the goals providers must achieve to receive this pay, but does not specify an overarching purpose the goals are to support. VA officials responsible for writing the policy told us that the purpose of performance pay is to improve health care outcomes and quality, but this is not specified in the policy. Moreover, the Veterans Health Administration (VHA) has not reviewed the goals set by medical centers and networks and therefore does not have reasonable assurance that the goals make a clear link between performance pay and providers' performance. Among the four medical centers GAO visited, performance pay goals covered a range of areas, including clinical, research, teaching, patient satisfaction, and administration. At these medical centers, all providers GAO reviewed who were eligible for performance pay received it, including all five providers who had an action taken against them related to clinical performance in the same year the pay was given. The related provider performance issues included failing to read mammograms and other complex images competently, practicing without a current license, and leaving residents unsupervised during surgery. Moreover, VA's policy is unclear about how to document certain decisions related to performance pay. For example, the policy does not provide clear guidance on what to document regarding whether a provider's performance-related action should result in the reduction or denial of the provider's performance pay. In contrast to the performance pay policy, VA's performance award policy clearly states the purpose of these awards-- specifically, that they are to recognize sustained performance of providers beyond normal job requirements as reflected in the provider's most recent performance rating.

VA policy also lists the measures, such as clinical competence, that providers' supervisors are to use to determine these providers' performance rating. VHA's oversight is inadequate to ensure that medical centers comply with performance pay and award requirements. VHA's annual consultative reviews, initiated in 2011, help medical centers comply with human resources requirements, including performance award requirements. Recently, these reviews began to also include performance pay requirements, but do not yet include a standard list of performance pay elements to review, which would be needed to ensure consistency of reviews across medical centers. Further, reviewers do not have the authority to require medical centers to resolve compliance problems they identify, and VHA has not formally assigned specific organizational responsibility to ensure medical centers resolve identified problems. As a result, VHA is unable to ensure that reviews consistently identify problems, and that these problems are corrected and do not recur. GAO found that two of the four medical centers visited did not always correct problems identified through these reviews. For example, a May 2011 review of one of these two medical centers found that the medical center did not conduct a formal evaluation of its performance award program, as required. A review of the same medical center about a year later found the identical problem.

Why GAO Did This Study

VHA administers VA's health care system and strives to provide high-quality, safe care to veterans. Concerns continue about the quality of care VHA delivers, but many physicians and dentists, referred to as providers, receive performance-based pay and awards. In fiscal year 2011, about 80 percent of VHA's nearly 22,500 providers received approximately $150 million in performance pay, and about 20 percent received more than $10 million in performance awards. GAO was asked to review VHA's performance pay and award systems. This report examines (1) whether VA's performance pay and award policies ensure appropriate administration of this compensation and (2) VHA's oversight of medical centers' compliance with policy requirements. GAO reviewed documents and interviewed VA and VHA officials about the administration of performance pay and awards and VHA's oversight of the related policy requirements; analyzed data from a random sample of about 25 providers selected primarily from primary care, surgery, psychiatry, and dentistry at each of four medical centers GAO visited that had at least one provider who was the subject of an action related to clinical performance.

What GAO Recommends

GAO recommended that VA clarify the performance pay policy, by specifying the purpose and documentation requirements and that VHA review performance pay goals for consistency with the purpose, and improve oversight to ensure compliance. VA generally agreed with GAO's conclusions and recommendations.

For more information, contact Debra A. Draper at (202) 512-7114 or draperd@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has taken action to address it. Specifically, in March 2014, VA published a revision to VA Handbook 5007, "Pay Administration," which specified that the purpose of performance pay is "to improve the quality of care and health care outcomes through the achievement of specific goals and objectives related to the clinical, academic and research missions of VA."

    Recommendation: To clarify VA's performance pay policy, the Secretary of Veterans Affairs should direct the Assistant Secretary for Human Resources and Administration to specify in policy the overarching purpose of performance pay.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has taken action to address it. Specifically, in March 2014, VA published a revision to VA Handbook 5007, "Pay Administration," which specified that VA Form 10-0432, "Performance Pay Recommendation & Approval" will be used to document when goals and objectives are communicated to each employee

    Recommendation: To clarify VA's performance pay policy, the Secretary of Veterans Affairs should direct the Assistant Secretary for Human Resources and Administration to specify in policy how medical centers should document that supervisors have discussed performance pay goals with providers within the first 90 days of the fiscal year.

    Agency Affected: Department of Veterans Affairs

  3. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has taken actions to address it. Specifically, in March 2014, VA published a revision to VA Handbook 5007, "Pay Administration," which specified that VA Form 10-0432, "Performance Pay Recommendation & Approval" must be forwarded through the appropriate chain of command to the designated approving official not later than March 31st of each year and that payments cannot be made until the form is signed by the employee and supervisor and approved by the approving official. In addition, VA revised VA Form 10-0432 to include a signature block and date signed block for the supervisor, the employee and the approving official.

    Recommendation: To clarify VA's performance pay policy, the Secretary of Veterans Affairs should direct the Assistant Secretary for Human Resources and Administration to specify in policy that medical centers should document approval of performance pay amounts and that the approval occurred before the required March 31 disbursement date.

    Agency Affected: Department of Veterans Affairs

  4. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has taken actions to address it. Specifically, in March 2014, VA published a revision to VA Handbook 5007, "Pay Administration," which specified that supervisors must document the extent to which a performance or conduct related disciplinary or adverse action impacted an individual's ability to achieve performance pay goals and objectives and what effect, if any, the action had on the performance pay decision. In addition, the revision specified that supervisors should document the effect, if any, the performance of non-clinical duties has had on the performance pay decision.

    Recommendation: To clarify VA's performance pay policy, the Secretary of Veterans Affairs should direct the Assistant Secretary for Human Resources and Administration to specify in policy how medical center officials should document whether performance-related personnel actions had an impact on providers' achievement of performance pay goals, and as a result, affected performance pay decisions.

    Agency Affected: Department of Veterans Affairs

  5. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has taken actions to address it. Specifically, in addition to specifying the purpose of performance pay in policy, VHA established a task force in June 2013 with the responsibility of reviewing and setting uniform performance pay goals across the system that are aligned to help VHA achieve its strategic imperatives . While VA did not provide evidence that this task force reviewed existing performance pay goals across the system, the task force did make recommendations intended to ensure a consistent and system-wide process for setting, evaluating, and awarding performance pay. For example, the task force recommended that the performance pay goals be actionable, achievable, measurable, and meaningful, which is consistent with the intent of the GAO recommendation. The task force also developed a set of possible performance pay goals for VA networks and medical centers to consider using in the development of their own performance pay goals. In addition, the specification of the purpose of performance pay in policy (which VA did in March 2014 in response to another recommendation) helps ensure that the performance pay goals are consistent with that purpose.

    Recommendation: To ensure that performance pay goals are consistent with the overarching purpose that VA specifies for this pay, the Secretary of Veterans Affairs should direct the Under Secretary for Health to review existing performance pay goals across VA's health care system.

    Agency Affected: Department of Veterans Affairs

  6. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has taken some actions to address it. Specifically, VHA issued a memorandum to VA network directors in January 2014 stating that network directors, in coordination with medical center chiefs of staff and medical center human resource officers, are responsible for monitoring and enforcing performance pay requirements. The memorandum also clarified various performance pay requirements and provided guidance on the types of performance pay goals that could be used. Additionally, the memorandum identified the specific requirements to be monitored and provided an attestation template for directors to use to certify compliance with these requirements. However, VA has not provided evidence of any actions taken related to ensuring compliance with performance award requirements. This recommendation will remain open until such information is provided. VA provided requested information and this recommendation is now closed.

    Recommendation: To strengthen oversight of medical centers' compliance with VA policy requirements for performance pay and awards, the Secretary of Veterans Affairs should direct the Under Secretary for Health to ensure medical centers are in compliance with the requirements in the performance pay and award policies.

    Agency Affected: Department of Veterans Affairs

  7. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) concurred with our recommendation and has some taken actions to address it. Specifically, VHA issued a memorandum to VA network directors in January 2014 stating that network directors, in coordination with medical center chiefs of staff and medical center human resource officers, are responsible for monitoring and enforcing performance pay requirements. However, VA has not provided evidence of any actions taken to assign oversight responsibility for performance awards, including ensuring that problems identified during CARDS reviews are addressed. This recommendation will remain open until such information is provided. VHA provided this information and the recommendation is now closed-implemented.

    Recommendation: To strengthen oversight of medical centers' compliance with VA policy requirements for performance pay and awards, the Secretary of Veterans Affairs should direct the Under Secretary for Health to assign responsibility to a VHA organizational component with the knowledge and expertise to ensure correction of medical centers' noncompliance with VA's performance pay and award policy requirements, including problems identified during Consult, Assist, Review, Develop, and Sustain (CARDS) reviews, and ensure that medical centers maintain compliance with these requirements.

    Agency Affected: Department of Veterans Affairs

 

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